the s&p is about 8% from that mark. here's how the third quarter settled. the dow was actually up 4%. year to date, it is up nearly 10%. the s&p gaining nearly 6% during the quarter and more than 14% so far this year. and the tech heavy nasdaq was up 6% in the third quarter. it's up nearly 020% so far, so 0% is achievable. as we get into things, we'll focus on the end of the year investment strategies. the economy is obviously a big part of this story. the qe announcement providing a shock to stock. we'll talk to charlie evans at 8:30 eastern time. and then it is your money, your vote. we'll start the countdown to the first presidential tee batd, that is on wednesday night. we'll be turning to a pair of political strategists in the next half hour for a preview. plus a cnbc exclusive, julia

boars sten catching up with sheryl sandberg. including just how many people put everything about themselves online. >> does it scare that you you've helped create a generation of oversharers? >> i think what we give is people the ability to share what they want. what is one person's ridiculous oversharing is another person's regular day and we build technology that lets users share what they want to share and that's tremendously exciting. >> julia will join us with more of that conversation coming up at 7:30. and we'll find out why craig barrett is not a facebook fan. and in sports news, yes, europe has retained the ryder cup. staging a comeback after the

u.s. began sunday with a big lead. europe has won five of the last six matches. this was a heartbreak for anyone watching this. we'll talk more about that a little later this half hour. but first before we get to all of that, andrew has this morn g morning's other top stories. >> we have global data this morning and not all of it that great. eurozone manufacturing reporting its worsts quarterly performance since the depths of the great recession. factories were hit by falling nand. survey suggests that the downturn began in smaller periphery countries has now taken root in core members including germany and france. speaking of europe, an expert group will present its findings to the eu commission, that's coming tomorrow. the proposal could recommend european banks separate retail banking from their riskier investment arms. but eu regulators said to be

unlikely to pursue such reforms at a time when they're trying to rebuild a banking union. and asia, a survey showing the economy has certainly suffered a seventh straight quarter of slowing growth. hsbc china manufacturing purchasing manager index revealing a near year long decline in business activity and a fresh fall in export orders in september. mr. kernen, how was your weekend, sir? >> it was fine. thank you. i was very invested. i was invested in every swing. and i had some -- i was unsettled. i'm still a little unsettled. in corporate data, extending treatment with roche's is not worthwhile, but shortening the treatment also looks unlike will to benefit patients even more.

the results limit the down side risk for roche's revenues at least. and a crucial vote today in boeing contract talks. a vote will show whether workers are willing to accept a less dependrous contract offer by boeing or move closer to a strike. the union is widely expected to vote down the current offer, but local officials and analysts consider a strike unlikely. and nokia is set to announce a new deal giving oracle customers access to nokia's map services. the agreement would be announced today at the oracle world conference. i've never known that maps would be so important in everybody's lives. such big important -- >> huge. >> saw something over the weekend about -- >> ever a day when apple gets maps? >> apple has a lot of money. if they just start pouring all money they have into making this better, they've gotten the message. >> i talked to engineers on

bring that said it is impossible, it might take you three years to get the information to be correct. it's actually the data. >> and google has truck has go up and down -- carl had written that one drove by his, the google truck that has the camera going around. >> you can't just write an al go rhythm that finds every single side street. it's a lot of roads. >> use everybody who has an iphone to replicate what google has done by having people literally use their iphone to actually take pictures of buildings. >> to help? >> yes, to help to try to recreate crowd sourcing operation. >> i'm not helping. that could be a tux tie. >> it's a woolly tie. i'm not sure it's a tux tie. >> you could wear it with a tux. it's a black shiny kind of a thing. that's a new one, huh?

>> do you like, dislike? >> i like the bright one you finally wore. >> that's a nice way to say this one you don't like. >> i think this one looks good with the pants, though. >> the pants with no belt? >> what's going on in the markets? >> so you did didn't really see the ryder cup. >> i watched parts. i watched the jets which was a disaster. >> it was a beaches marathon weekend, wasn't it? >> i watched what you didn't watch, but i won't mention if you tonight want me don't me to. >> he watched homeland, that's your idea? >> i was excited to watch because i had been waiting for all year to watch. >> you finally broke away from life time to go on to homeland or something is this. >> i was watching keeping up with the kardashians on e first, which is a comcast network of course. >> i've come to grips with this. >> the ryder cup? >> yeah, and the way i've come to grips with it is that to have

a -- they were talking about sevi a lot. and to come back and have this incredible victory polster's performance was the start of it. i've never seen johnny miller speechless and it kill immediate for furyk who had a rough season anyway. tying we're have -- he would have worn. i was glad tiger was the one bringing in the rear, but there was nothing for him to try to save. these guys together -- >> after he got the 8-foot put.

wasn't it -- i mean, i had it all on tape, but it was the greatest spectacle. i was on the edge of my seat. michael jordan was there. clinton called in. >> george bush was sitting next to michael jordan or near michael jordan. >> and 41 was there, too. >> yeah, my favorite was the tweet. they said, whatever, europe, go solve your debt crisis. >> yeah. >> that's kind of the sentiment. >> jack had talked earlier about the only thing that could get him away from football would have been the ryder cup. he saw probably every swing, too. >> i've had experiences myself with puts and stuff. and heart democratic break.

so you have to feel like -- >> watching the reaction from both teams towards the end, they caught a couple in the "wall street journal." >> phil -- >> was that saturday? >> no, this was 17 after he would have -- justin rose hit that long put. phil can chip from behind the green on 17 and that would have won. that was -- >> tiger had one that almost went in. >> so that wasn't heartbreak there, he didn't know justin rose was going to hit a 30 footer and then win 18 either. what happened in homeland? explain to our viewers what it is. >> you watch it, too. >> i do. >> it's on show "time." do you want to talk about the jets and rex ryan going crazy?\" do you want to talk about the jets and rex ryan going crazy?"" do you want to talk about the jets and rex ryan going crazy?t" do you want to talk about the jets and rex ryan going crazy?i" do you want to talk about the jets and rex ryan going crazy?i" do you want to talk about the jets and rex ryan going crazy?i" do you want to talk about the jets and rex ryan going crazy?r" do you want to talk about the jets and rex ryan going crazy?t"

do you want to talk about the jets and rex ryan going crazy?d jets and rex ryan going crazy? told everybody not to go to pray pra monday and tuesday because tefs it was embarrassing. and the tebow throw which was a fine throw, but what's his name got totally killed. >> is that where santonio holmes got hurt? >> no, he was hurt earlier. people being carted off the field the whole time. >> let's get a check of the markets. from the third quarter, you saw very strong numbers coming in. the dow, s&p 500 and nasdaq all up about 4.3% or even better. that reverses some of the losses that we saw in the second quarter where the dow was down by 2.5%, s&p down by 3.3 and the nasdaq town by 5%. and, yes, the dow is almost about 5% below the all-time closing high of 14164. s&p about 8% away from it all-time closing high of 1565. a lot of things happening catod, but new quarter, new start.

it is within striking distance, joe. >> i thought about that. you know all the different ways to win the election, the nasdaq might work for me for 30%. if that doesn't work, i'll back to the october lows. within way or another. it's hard enough to say if the market is going to be up or down at the beginning of the year. so to say 30 and if we get 20, i'm right. >> take a look at europe. you'll see they are looking at some positive movement even though there's a lot of concern about what's happening on the global economy and what's happening with europe in particular. germany today is up by better than 1%. 83 points for the dax. up 1.3% for france. and ftse up by close to 1%, as well. in asia, many of the markets there closed. in shanghai, something called national day, but they're closed for a week for national day, so they won't be open until october 8. in hong kong, markets -- >> they close for a week?

>> for national day it's called. >> but it's not national week. >> national day. i didn't get that myself. >> shanghai? >> that's in shanghai. >> i'd close that market for it a week just on -- >> concerns? >> for what it's been doing, exactly. give people a little bit of a break. but a week, that's crazy. >> closeded for a week. >> so cnbc probably a lot less news to deal with. >> hang seng is closed. i don't think they're closed for quite as long. take a look at oil prices. that has been a huge story. this morning down about 23 cents. $91.96. the ten year at this point yielding 1.633%. unchanged at this point. the dollar, another big story. at this point the dollar is down against the euro, 1.2893. up against both the yen and the swiss franc. and gold prices this morning are indicated -- well, they barely

bunched. $1772.80. >> you mentioned cusack? the kospi is he closed. and then i -- and do you say happy -- >> it's the harvest festival. hang seng closed for the mid autumn festival. >> does it mean harvest? okay. time for the global markets report. ross -- >> ross is here? >> oh, no, is it because they won? >> oh, boy. >> kelly, stand to the side, i have to do this one today. >> oh, man. you know, do you remember what i said last week, becky, the one thing that i wasn't looking

forward to was olay, olay. you guys are obnoxious when you win. and you know who else is sergio. he was so tough with furyk. that was unbelievable. >> that was the key game. >> everybody was key. you won eight matches and tied one. and the two johnsons won. and one other guy. and what's his face, the dufner. you won everything. lee westwood. >> i just saw the mickelson/rose match was have a ordinary because the quality of the gfl was amazing. >> poulter and rose delivered the goods. might have been great to watch for you. >> you called it right, joe,

because actually we didn't know who was going to win even at 13-13, right? and whatever happened, it was totally gripping. >> unbelievable. >> it is extraordinary. >> may heart was racing. they talked about if you were furyk or martin kimer, about the same length putt and it was really compelling. congratulations. you guys deserved it. justin rose beat mickelson. mickelson didn't fold. >> no, he didn't. that was the probably the best match out there. >> and poulter both days, right? >> yeah, it was amazing. but i thought the fascinating thing was the last two groups, none of those guys on either side had won a point all week

and it came down to them. >> rory barely made it in time and didn't need a warm-up, but he was so good. >> that's the way i play golf is turn up. right? we get there late. >> only thing similar we do is coming late. from you fr then othen on -- >> do you see the wall behind him? >> when i saw him, it was a feeling of dread. >> he has the whole thing. >> ross westgate, sounds like a lot of people at home that don't follow it closely think you're one of the golfers. oh, no, it's lee westwood. you're close enough. >> you can imagine hitting any of those shots, any shot, joe, under that pressure? >> no. i couldn't. i looked at jim furyk and watching how many times he backed -- steve stricker towards the end, no, i didn't think about it.

and even tiger. probably would have helped if he hit that little four footer so that it was 14-14 at least we wouldn't feel bad. >> yeah, that was quite gray issue gracious. that match probably deserved to be tied. >> and that putt at the end was weak. and he still had the smile on his face, the weird smile. but that was sad. anyway, anything else going on? there really isn't, is there? >> i will give and you quick recap because you were talking about the pmis a little bit earlier out of europe. markets are up. green on the board as you can see. advancers outpacing decliners by more than 8:2.

dax up 12. cac up five. despite the fact those pmis came in weak, they were actually a slight tick up. even german ones. the french numbers were slightly weaker, too. spain not up quite so much. we heard from bank company popular, desperately trying it avoid having to take official aid.co popular, desperately trying it avoid having to take official aid. stock down 12.5%. other spanish banks are up. we know 60 billion will need to be injected in total. plenty of others, 40 maybe comes from eua. 20 from banks themselves. spanish yields are slightly lower. and here we go, ten year spanish

yields below 6%. we have agreement at well. long a wait 33 revised merger. there is still going to be some contention over the revised pay plans, as well, but mick davis will no longer be part of the revised group. so still way to go. we have to hear. but that's where we stand on the post-ryder cup monday morning. ext extraordinary event. >> as he puts his flag back on his lapel. >> there will be a lot of -- it would be even worse i think over where you are with the press, but a lot of negativity about every one of these guys. it will be a rough -- this is never going away. never.

p. >> well, the thing is, the british press were writing on sunday morning, they reckon this was possibly the best u.s. team since heath in 1981. so any don't turn into bad golfers on one bad afternoon. >> no, i know. but they were better with teams. and when they were on their own, i don't know what the hell happened. but you guys won it. you did. but any of these guys, just -- if only one had stepped up, just one guy had really stepped up, it would have been -- my share tweeting wake me up when the ryder cup chit-chat is over. sorry, hair, you're wrong about that one. that might have been sore ken's hair saying that, i think. not mine. coming up, today's national weather forecast, plus this

weekend's sports highlights. we'll do the ryder cup again and john har ewood joins our politil conversations. accolade overdrive. zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz. [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it.

there was also football to watch yesterday. the eagles beat the giants 19-7.

short on a 54-year-old field goal that would have won it. philadelphia held on to win. and in the other game of interest in the new york area, the 49ers beating the jets 49-0. 49ers, 49. >> no, 34-0. 34-0. >> a lot. >> 34. and -- >> 34 is right. we have it right on the screen, wrong in the prompter. >> it would have been 41. >> i stopped watching about the third quarter. >> quarterback took a dive on the 3 yard line to not score another touchdown and then got the victory snaps just so he wouldn't run the score up to 41. now to the national weather -- >> he did it on purpose? >> yeah, to not run up the score. >> why? >> because if it's 34-0 and only a minute left, you don't need to

make it 41-0. a classy move. now to the national weather forecast. alex wallace joins us from the weather channel. it was cool this morning, alex. it's almost like fall this year. >> well, it's here, definitely here for us. and enjoy today. particularly parts of the northeast. because wet weather is on the move. and that weather right now, it's here in the south. you can see it's this storm system that will be moving in that jen direction to spread in some of that rain. we're also tracking a front in the middle of the country bringing in a new showers. but the heaviest of the rain across the south. tennessee valley starting to press up in to southern kentucky. more showers and storms trailing back across eastern sections of alabama. some of those storms producing heavy rains. and we've seen a couple tornado warnings coming out here, as well. so we'll watch that area very closely here this morning. but again as we work our way through the day, the wet weather is in place stretching its way all the way up in to the ohio

valley. wl louisville 59 degrees. oon into tomorrow the rain begins to move up into places c. and new york city. on wednesday, more rain to contend with moving up across a good chunk of new england. so next couple of days not looking so great here in the northeastern part of the nation. detroit in the cool, greatish sort of day with the middle 60s. while that's going on, we have a bit of a chill down on the way. for monday, temperatures across the northern plains in the northern rockies going to be mild. 10 to 15 degrees above average. but cold front comes through, the bottom drops out. 20 degrees below average in billings by wednesday. back on to you. we'll take a quick break, talk presidential politics and what paul ryan says about the romney/ryan tax plan. chools in e world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects.

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welcome back to "squawk box." u.s. futures this morning look pretty good. up 61 points. friday down a little bit. but a new quarter. also a new month. i guess for to be a new quarter, it has to be a new month. weird, though, because monday is on a 1st. >> doesn't always happen that way. >> october is one of the cruelest months. >> it typically is.

>> i'm in the gambling on a cruel month. >> now you're bullish after i got my 20 out of 30%. >> let's talk about some of our top stories this morning. the first presidential debate comes on wednesday. both campaigns out in full force on the weekend shows. paul ryan caught my attention talking taxes. take a listen to this. >> let's talk specifics. >> no matter how many times they try to tell you they're going to start talking specifics really soon, they don't do it. and the reason is because the math doesn't work. >> you're the master of the budget. so let's go through the plan. the obama camp says independent groups say if you cut those tax rates for everybody 20%, it costs $5 trillion over ten years. true? >> not in the least bit true. >> how much would it cost? >> its revenue neutral. >> i'm just talking about the cuts. we'll get to the deductions. >> the cut in tax rates is lower all americans tax rates by 20%.

it's revenue neutral. >> it's not revenue new pral unless you take away the deductions. the first half, lowering the tax rates, does that cost $5 trillion? >> no. look, i won't get into a baseline art with you but that's what a lot of this is about. lowering tax rates by broadening the tax base works. and you can -- let me finish. >> you haven't given me the math. >> i don't -- it would take me too long to go through all of the math. >> i got to tell you, what did you think of that? i thought that was unbelievable. >> why? >> first of all, it was on fox which we all have views on what you think fox will do. second of all, i think he has no details. >> i don't agree with that. he sat on the set with us. >> they provided zero -- >> in this caught my attention so i decided to -- >> zero details. but more importantly, later in the tape, which we didn't get a chance to show, he says we're

going to be able to keep charitable deductions, keep the mortgage deduction, keep the deduction on health care. and there is no way in a million years no matter who scores this including marty feldstein and others that would possibly suggest that this could be revenue neutral. >> it does if you broaden the base to 100,000. >> but that's not what he talked about on the show. and he refuses to say exactly what the detail is. >> you know they aren't going to tell you the defatales because -- >> because the answer -- >> wait a second. the 28%, the 28% number is the number that's pretty widely used in simpson-bowles and a lot of other places. yes, you can get to that 28% and do it. and you can get to the 28% if you're willing to cut out a lot of -- >> you can get to 28% if you get rid of the mortgage deduction -- >> no, that's on $500,000 and more. it gets rid of second home mortgages. >> but he didn't say that. he said he's keeping the mortgage deduction. >> they won't give you details

until after the election. >> that's the problem. >> you want to get another person to admit that there's no details? >> yes, i do, but you can't run around on television and say, look, we're going to hand you the world and make taxes so much less -- >> that's what both sides are saying. what the president has laid out is that everybody keeps their deconstructid deductio deductions -- nobody looks at any of the details on one side. it's not fair to go after one side and not the other. >> i just think it's really nice to see you really excited about this. that's good. joining us from washington, john harwood. is this like when you do to pass a bill to see what's in it, kind of like the same thing, isn't it? >> i don't know about passing the bill to see what's in it, but on andrew's point and your point -- >> you're going to agree with andrew? wait a second. let me stop the presses here. >> i haven't said anything, dude. >> okay, go ahead. let's hear. >> my point is, yes, you can get

to 28%, but remember, that simpson-bowles raises money. it's not revenue neutral. that's the difference. simpson-bowles raised a lot of revenue. and becky is right, look, presidential campaigns especially the last month are not where campaigns decide to lay out the difficult details. remember this, ronald reagan ran for re-election and there were vague illusions to tax reform. did he layout a tax reform plan? he did not. they passed tax reform in 1986. so of course journalists will press for details because it is difficult to make plans up. we can't know precisely how the obama administration proposes to raise the top corporate rate to on 28%. we don't know how mitt romney proposes to lower the corporate rate to 20%, 25%, i forget which one, because they haven't identified the loopholes. >> but that's linchpin of the

whole campaign is around taxes, is around lowering taxes and is around -- >> actually, it's not. actually, it's not because if you remember, andrew, in his convention speech, he didn't especially mention his individual tax cut. and he went out on the road last week and said by the way, i'm going to cut tax rates, but don't expect a big tax cut because i'm going to take away deductions. so romney in fact and i've talked to romney's strategists about this, they know that voters don't actually believe that you're going to have a big net tax cut for anybody. it's not credible. >> the linchpin of the entire plan is to raise taxes on people 250 or above, which does nothing for the definite sit, does nothing with entitlements. not only are you not talking details, all you have is raising tax on people that have money and talking about nothing else. >> the distinction is that the romney campaign is saying we're not going to raise taxes on the

middle class, but by the way, we really are. >> hold on. joe, obama -- first of all, raising taxes on people at the top may not be sufficient, but it's not nothing. it does raise money. >> we need a trillion and it's like $80 billion. >> $80 billion? >> it's like 80 build per year. and we need to cut -- close the deficit by a trillion. we got a trillion dollar deficit and it raises like -- i think it's less. maybe 40 billion. >> are you correct, it's not sufficient. >> and he's not talking about anything else. you can keep your entitlement, keep this -- he's not talking about doing specific things with entitlements. >> you're right to this extent. he's not talking specifics on entitlements. >> it's mostly we'll tax rich people so that -- or people that make over 250 and you'll basically get to keep everything

including the phones. >> joe, i thought you either wanted to talk about the last minute kick that a billy -- >> i didn't see that. oh, the redskins. >> or my terrific story on debates in the "new york times" this morning. >> it was between piece. it was a very good piece. >> i did see that. >> thank you. let me recap. >> you didn't even mention the bengals beat the redskins. >> i was going to if you brought it up. and congratses on the reds, too. they have tied the nationals for best record in baseball. so we've got a race in the last three games for top seed. on debates, what the history tells us is there are lots of ways to have moments. but to really turn a campaign around, you've got to combine a series of moments. you have to be exceptionally good yourself, your opponent has to screw up a little bit, your team has to take advantage during the course of the debate

period which in this year will be three weeks long, they have to be more aggressive in their spin and all that. and when all that comes together and it did in 2000 for george w. bush against al gore, then you can take a race with a republican who is trailing about the same amount that romney's trailing now and they reverse that and bush left the debates with a lead. that's the model. >> foreign policy still a wild card, too. and even some polls on the economy, romney seems for be doing better on those. two points on the gwu poll today, right? and we'll get rasmussen -- >> i didn't see gw. i saw a "washington post" abc poll showed two points among likely voters nationally. >> in was two on gwu, too. politico was two points. rasmussen and gallup at 5 and rasmussen at 2. >> polls it show obama up 11 in swing states. that sounds high to me.

but in any case, obama's ahead, romney has to change something. he has a chance to do it. >> all right, john harwood, thank you. >> today is the start of the fourth quarter. and joining us is teach stanley, chief economist for peerpont securities. the lead story is how trade is slowing around the world. all of europe's problems getting exported to the rest of the world. what do you think this means just in terms of the fourth quarter and maybe a look into next year? >> good morning, becky. well, i think right now the u.s. economy is really slow in part because of what you guys were just talking about, the election. i think a lot of businesses have gone to the sidelines and they're waiting to see as you all discuss, we have a huge choice to be made. and businesses don't really know what the outlook is going to be for the next four years. so if i have -- if i'm a businessman and i have an investment or hiring decision to make, i'm just going to wait a

couple months that the point. and would he ha we've seen that in the employment data, investment came day take, durable goods orders and other indicators of manufacturing activity. coupler has held up okay, but we might see a little bit of that from the consumer, as well, as we head into the election season. so everybody wants to put a huge long lasting fundamental spin on every wiggle in the data, but in this case i think it's very much a short term story that the economy has slowed down in large part because people are just waiting. now, the european situation obviously continues to an negative. i think people probably put too much weight on that. it certainly is a down side risk. but if you look at the volume of the trade flows, it's not enough to make or break the u.s. economy. so unless europe just entirely implodes and causes a financial crisis, i think the u.s. economy is going to raise or fall on the domestic demand numbers not so much on the trade flows.

>> jeff, do you agree that the election has created some uncertainty? >> yeah, i think that's very well put. i think he's spot on with his comments. i think a lot of businesses have stepped to the seed lines waiting on the upcoming presidential election. and yet some of the metrics that we look at don't suggest that the economy in the u.s. will get pulled in to a recession. small fiberglass bet sales are up double digits. harley-davidson sales are still pretty good. not the kind of metrics you see going into a recession. >> does that mean you think the market will go up no matter who wins as long as there is certainty on the other side? >> i do. far i think i've shown this chart on your program before, the typical s&p raiding pattern in an election year has been playing at about a 98% correlation. and it calls for a little bit of a pause or pull back right here. and then after the election higher into the year. i think that's the way it will play, that's the way it played the past couple years.

i think it playses that way here. >> is it dependent on what solution they have for the fiscal cliff, if any? >> the body language i get is that it sounds oxymoronic, but they'll get hc-- postpone the mandated spending cuts and spend the bush tax cuts. so i think that's off the table here at last in the short run. >> if we kick the can down the road another six months or so, what will that mean the difference of the bush tax cuts extending for six months or not? >> well, it's good news and bad news. the good news is that all the talk about 4%, 5% of gdp hitting in the first quarter that won't happen. the politicians may be ineffective in many ways, but they won't allow that. at the same time, if we just keep kicking the can down the road, well be addressing this uncertainty every since months. we saw it at the end of 2010, we saw it again at the end of 2011.

if we just keep doing this every six months, it will be difficult for the economy to get going. for all the talk about the fiscal cliff, ultimately what people in the economy are looking for is they're looking for some clarity on how we'll get back to a sustainable fiscal path. they want to know what their tax rates will be, what regulatory policy will be. so kicking the can is better than just falling over the cliff, i suppose, but at some point, we need to actually address this such. >> i hear you and i agree. steve, jeff, thank you both very much. coming up, your money, your votes. strategists from both parties square off on on taxes, spending and much more.

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he's a good debater. i'm just okay. but what i'm most concerned about is having a serious discussion. about what we needed it to do to keep the country growing. >> pam will be formidable. it will be a good debate, but i certainly do not underestimate what barack obama brings to it. >> that was the president and the man who is playing him during mitt romney's debate prep by talking expectations for the first debate. of course it's just two days away. joining us with a review, terry nelson, gop strategist, and democratic strategist morris reed. let's start with you this morning, terry. there is a sense the "washington post" has a piece out this morning that romney needs to be the instigator, he needs to be

the aggressor. is that right and can he do it? >> i don't know if he needs to be the instigator. there has been clearly a lot of focus on the romney campaign. he needs to have a very solid performance and 2that's the mos important thing, that he makes his points in a solid and forceful way and if he does that are, i think and he will come out all right. but the idea that he needs to come in a have a debate defining moment in order for to be a success i don't think is right. >> is there one issue or theme that he has to hit home? >> he has to -- this race is about the economy and jobs. that's what people care about. and i think one of the distractions for the romney campaign has been that they have not been able to really pound that message day in and day out. if they can come back to that, it will be successful for them. >> what did the president have to do, beyond look presidential, i imagine? >> both of these guys have to play offense. so it is not going to be sort of a run out of the clock

opportunity for either guy. the president isrd shal. he is the commander in chief, so he doesn't have to look it, is he it. he is it. mitt romney is a good debater, the president is a good debater. there will be no knockout punch but they'll have to be solid in order to move the ball down the field. >> we saw a clip in the previous segment from fox over the weekend with ryan and the big issue was the details on the tax plan. how much more in terms of details do you expect we'll learn from romney and by the way, are we going to learn any more details in terms of what president obama's planning to do? i'll go to you, morris, with that first in. >> we don't have any details on what the challenger is going to do. governor romney said he'll create 12 million jobs and the president has laid out a vision, put a marker in the ground and does have a track record to run on if you look at what he's been able to do in four years in moving us from the worst

economy, almost a depression to where we are now in a recovery moving in the right direction. the devil will be in the details and the governor just can't sit there and say i'll create 12 million new jobs, trust me. >> terry, do you come out with the details during a debate like this around the table? i've been told repeatedly you don't do it until you win, frankly. >> well these debates are not great places to come out with a detailed plan, the amount of time each candidate has to address the issue also be limited. clearly both candidates will press, both guy also press the other one on some of the details in an advantaged way. i heard the debate earlier about the details and governor romney's plans. he also has laid out a vision for the direction he wants to take the country. we need, we could have a debate about the details president obama put forward a budget that every member of congress voted against, democrats and republicans. we could put him on the details what a realistic budget would be for the u.s. government and have

the same debate on that side. campaigns are about vision. campaigns are about putting forward the direction you want to take the country in and that's what it's about and if we're going to press in on the details let's press in on both of these guys. >> little' leave it there, terry and morris, appreciate it very much. >> thanks so much. i'm going to do the tease. coming up, craig barrett joins us on set, we'll talk tech and he'll tell white house he's voting for come november and why. and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.

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when we return, we have more of this morning's top story, as we begin the final quarter of the year and we'll welcome today's guest host. what former intel chairman and ceo craig barrett says is the next big thing in tech and why he is not a fan of facebook. cnbc's julia boorstin caught up with cheryl sandberg, the company's chief operating officer. among the topics they talked about, life after the ipo. . >> i think there is a lot of interest and speculation out there, oh, my god, has everything blown up and the answer is no. if you come to facebook for work as did you four months ago i think we're a stronger company today than we were then. andiamo! andiamo! (let's go! let's go!) avanti! avanti! (keep going! keep going!) hahaha...hahahaha!

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tracking techs. former intel chief craig barrett with insight on the latest trends in the technology, the economy and the future of education, he's our guest host this morning. facing off with facebook's chief operating officer. >> we believe we're one of the most effective places you can spend every dollar. >> cnbc's exclusive interview with sheryl sandberg. what the social media giant is planning to do to boost its bottom line. >> the latest business headlines to get you ready for the trading day at the start of the fourth quarter. the second hour of "squawk box" begins right now. good morning everyone.

i'm becky quick along with joe kernen and andrew ross sorkin. take a look at what we have coming up in a few minutes, former intel chairman craig barrett, and then at the bottom of the hour, julia boorstin brings us her exclusive interview with facebook chief operating officer sheryl sandberg. here is a sneak peek. >> in the last year we've done over 60 studies look at the impact facebook ads have on ringing the cash register. of the 60 studies 70% showed a return of ad spend three times or better and 49% showed a return on ad spends of five times or better. >> and at 8:00 a.m. eastern time, professor of finance jeremy siegel on prospects for the fourth quarter and beyond and 8:30 eastern chicago fed president charlie evans will

talk fed policy, jobs and the economy, all on the way. first let's get you over to andrew with this morning's headlines. >> a quick look at future this is morning, we've got green arrows across the board, up 63, almost 64 points if we opened up right now and the dow and nasdaq 16 points higher, s&p 500 will open up higher as well. we've got a busy week ahead on the first day of october and the fourth quarter, first day of the new supreme court term and the first debate between president obama and gop challenger mitt romney, that's set for wednesday and wall street looking ahead to the september employment report, that's due out on friday morning. the international air transport association raised its industry profit forecast, expecting the airlines to make $4.1 billion, up from an earlier forecast of $3 billion but considerably less than last year's $8.4 billion figure. general motors is recalling almost 41,000 cars sold in warm

weather states, the recall is due to a plastic part that could crack and cause a fuel leak, the chevy cobalt and equinox and pontiac g5 and torrant suv sold through 2007-2009. we'll go back to ross in a second but we are indicated higher here because of what's happening there, and i don't know if there's no riots, maybe that's it or it could be what we already talked about. >> the ryder cup victory? >> there were no french guys on the team although paul lowery was there. we remember martin kaymhymer wo be an afterthought and now he's the one we remember. lowery is thought of as the worst british open winner they

called paul lowery. he made a statement yesterday, ross. >> yeah, and actually he played really well. >> i know. >> in foul conditions so i think it's a little unfair. >> you guys, you know, your entire continent is in chaos, economically you've screwed so many things up but at least you won the ryder cup. i'm getting messages from people over in europe, "socialism works" giving me a nani, nani, nani, see what socialism can do because of the ryder cup. i'm getting a little belligerent. >> i'm not sure about the socialism makes you good at golf argument. >> gives you a lot of time, you have four-day work weeks, three months off in the summer, practice your short game. >> i have three, i wish i had three months off in the summer, joe. gee, that would be good. then our golf would be good if we could do that. large chunk of that team,

british and irish players as well it's worth pointing out. this is where we stand, is it a ryder cup bounce, i doubt it. we are firm. advancers outpacing the decliners along the lines of more than 8:1 at the moment and good gains as well, up a percent for the ftse 100. the markets have been up 3% on the quarter. the dax up 12%, the ibex up 1%, despite a big fall for banc banco popoplare. they came up with a capital raising plan. santander, bbva up 60 million. there are those who think we might need to put an awful lot more than that in over future periods. we'll have to wait and see, much will depend on the economy and

what happens with underlying property and asset prices as well. now, markets are a little bit firm despite the fact we had pmis at deep contraction levels. the key point they were slightly higher than the flash numbers that we had ten days or so ago. so that may be why there is no negative reaction because they weren't any worse. yields spanish yields 5.8%, below 6% and italian yields are lower as well. that's where we stand, what was the score again? back to you guys. >> 13 1/2, 14 1/2 i'm surprised he's not wearing his euro flag again. >> wasn't even a tie, which that's fitting though. >> you know what stuck in my head? ♪ ole, ole, ole, ole >> and sergio seems like we to take the sevy mantle in terms of gamesmanship, always measures to see who is up.

>> i saw him a couple of times with his hands in face. >> sevy used to see guys putting in white shoes, fine, that's okay, ross. it's all right, whatever you got to do. >> they won fair and square. we'll give them that. ross, thank you. >> sevy is the master but he's good when he got to be good. they don't win majors. luke donald. martin khymer is the only one who can't win a major. >> he's gone. >> now you're not talking so big, are you. >> by how many shots? >> lee westwood, never won a major, luke donald, actually got rory who is winning left and right. never mind. >> how many shots? >> never mind. never mind! it was great drama. it was great for everybody. it was great. it was great. >> it was great tv. >> these guys got a long time to think about that. long -- but the one consolation they have, everybody, nobody

stepped up, so like you can't blame -- >> we all stink. >> can't brlame keegan bradley r webb simpson. >> i'm glad for that. i don't like one guy shouldering the whole thing. today marks the first day of the fourth quarter and there are a lot of green arrows. joining us is scott nations of nations shares and "options action" contributor. scott, you saw the headlines in the "wall street journal" today about how trade is slowing down around the globe, heard ross talk about the numbers that came out weren't worse than what we'd seen before but weren't much better either. why do we see the green arrows? >> spanish banks are 60% as broke as we feared and i think that's good enough to overcome eurozone joblessness of 11.4% and china pmi of below 50. i think people were really afraid the spanish banks were going to need as much as 100 billion euros and the fact they only need 60 is considered good

news. also our markets are in pretty good shape. fear is low. the vix is low, relative strength index, we're not overbought or oversold. s&p series of higher highs and higher lows, all in all things are in pretty good shape. it is three years this month that greece finally decided with the hole in their budget that started down this path but to a degree unlimited bond buying in the eurozone is going to overwhelm the politics in the eurozone we're in pretty guide shape. >> are these problems really going away or is this the ebb and flow that we have come to expect with these european headlines where you get good news, you get some bad news, you get some good news, you get some bad news. are we reaching the end of the cycle or is that the next wave? >> no, i don't think we're at the end of the cycle. that's how this is going to play out in europe. for example we thought germany

was on board with everything. >> doesn't look like it now. >> the austerity bloc in germany wants to be more austere. 17 countries and 17 governments and 17 societies. it's completely messy and the nature of the beast. i assume today will be important, i also think that there's enough data coming out over the course of the week that i don't think we're going to just come to a stop late in the day on wednesday, like we often do the week of jobs, but obviously jobs is going to be really important, below 100,000 is going to be bad, above 150 would be great and joe can start rehearsing mr. or president obama for another four years. >> what, if it's over 150? >> i think if it's over 150, you're going to see him a whole lot for the week after that, talking about jobs and how he's creating jobs, yeah. >> um-hum.

>> i know that doesn't make you happy. we can pile that on your unhappiness for the -- >> you're just saying either/or, you're not predicting what's going to happen with jobs, right? >> well i've seen as high as 130, as low as 100. i think it's a little too early to talk about it. i think it will be on the low side of that range, but that's why i think under 100 is bad and above 150 would be great. >> the bad numbers really haven't hurt him recently so i don't know if the good number -- i don't know at this point and what's the participation rate going to do? how are they going to play around with that this time, going under eight by the election? >> well, if participation continues to fall off, then yeah. >> right. >> unfortunately that's a pretty wonky, geeky conversation to have. >> doesn't matter if it's under eight, if he can claim it's the same as when he took office,

that would be a big help for him. it would be at least the same as or below when he took office instead of 43 months above where it was when he took office. >> absolutely right and the problem for mitt romney is, can you imagine mitt romney trying to have a conversation with the american people about the participation rate? i mean that's not going to go over really well. >> take too long to explain. >> scott thank you very much. see you again soon and catch scott on "options actions" that airs fridays at 5:00 p.m. coming up next, education tech, the global economy and more, former intel chairman craig barrett is going to join us for the remainder of the show. and later, julia boorstin's exclusive interview with sheryl sandberg of facebook, who reveals facebook's plans to make money outside of advertising. we'll hear that after the break as well. >> comments? questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew,

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our guest host craig barrett, former chairman and ceo of intel. it's really good to have you. this is like twice in the last

three weeks you've been on, isn't it? >> it's a pleasure to be with you guys. >> we'll talk tech, first of all, do you feel total, do you feel like a generation wire? are you totally insync with everything in technology now or do you harbor any resentment to all this new stuff, craig, having been at intel in the glory days? >> hey the beauty of tech is everything changes every year or every six months and that's what made it exciting for me for 35 years. i love it. >> you don't harbor any resentment to the whipper snappers 23 years old in silicon valley? >> i harbor no resentment to guys and gals who bring great technology and the marketplace and change the world. >> so even though with facebook, i think you thought it was richly valued at the ipo. >> well i think the shareholders thought it was richly valued at the ipo as well. >> do you think social media is a bubble? >> it's not a bubble. you can't have a billion users in something and call it a

bubble. >> you need to monetize it though. >> the big issue is the monetizing. years ago i was in bogota, colombia, giving a presentation to a bunch of 50-something business and government execs and i just asked the audience, there were about 500, how many of you are on facebook, this was years ago, 80% of them put up their hands. i figured facebook has got something at that point in time, and the latin americans really love to share with their families and things like that, so colombia has been one of the highest users. now it's, how do you monetize it? that's the name of the game. >> in bogota, we call it bo-go-ta, it's -- do you believe that? >> you guys say it, i believe it. >> exactly, only in new jersey. >> he was on his facebook page just before the show. >> is that true? that's a joke. >> i'm making that up. >> ha! anyway, how does tech look to you right now?

>> i think tech looks as good as the international marketplace looks. >> it's not domestic? you're really more concerned with brazil? >> a company like intel does 75%, 80% of its business outside the u.s. so i mean i know people love to say what was the sales of fries over the weekend or u.s. computer sales but it's the international marketplace. the international marketplace stays strong, india, china, brazil, middle east, africa is an emerging market. tech does okay. >> it's a big if right now. >> it's a real big if right now. if the marketplace stays strong i'd be comfortable with the big tech guys, the microsofts, the intels, the ciscos, the ibms and that crew, but i always used to get frustrated when people just focus on the domestic market and try to extrapolate that when the majority of the business is outside the u.s. and nearly all the growth is outside the u.s. >> do you think intel ever gets back to its highs? >> that's a long way to go.

i'm not sure we want a bubble like we had back in '9 -'99. >> it was so beautiful, wasn't it in. >> it was, you know, it was very -- >> it went up, it commit, it went up, it split. >> there is this thing called gravity. >> unfortunately, for intel or cisco or any of those companies i guess. >> well, it just depends on the ability of the current team to grow the revenues and grow the earnings. >> that doesn't show it there, going back to '03, what was the high in '99? >> it was in the 70s. >> almost 80. >> yep, i remember those days. >> did you sell anything? >> i bought a lot of stock. i still hold a lot of stock. i have a lot of confidence in the company. >> you're a romney guy, why? >> i liken the administration

friendly to business and the economy and wants the economy to grow. i think the romney team has more emphasis in that direction but i'd really like to see some major changes come out of washington, d.c. i'd love for the tax code to get simplified both in the business and personal side. >> do you know details or you figure you elect someone and we'll figure out how to do it? you can only do so much with the congress. >> you can only do so much with a congress but i'd love people to say get the government out of business, let's cut every government subsidy it is. >> crony capitalism? >> it's more than crony capitalism. we have a tax code on the business side which has all of these little favors you give to different companies, cut all of that stuff, take the corporate tax rate down to, i don't care, 15%, 20%, make it internationally competitive, make it an incentive for investments in the u.s. as opposed to its current disincentive to investment. >> you're not saying paying less than taxes. simplify. >> grossly simplify it.

we've all seen xwrge doesn't pa any corporate tax. have a 3 x 5 card, this is your revenue, this is your earnings, pay 15%, 20% of that. >> former intel chairman craig barrett, what a wonderful world. >> when we come back the giants falling short in philly. and the future of facebook. tdd#: 1-800-345-2550 low-cost investment options-- tdd#: 1-800-345-2550 like our exchange traded funds, or etfs tdd#: 1-800-345-2550 which now have the lowest tdd#: 1-800-345-2550 operating expenses tdd#: 1-800-345-2550 in their respective tdd#: 1-800-345-2550 lipper categories. tdd#: 1-800-345-2550 lower than spdr tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and even lower than vanguard. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that means with schwab, tdd#: 1-800-345-2550 your portfolio has tdd#: 1-800-345-2550 a better chance to grow. tdd#: 1-800-345-2550 and you can trade all our etfs online, tdd#: 1-800-345-2550 commission-free, from your schwab account. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 so let's talk about saving money, tdd#: 1-800-345-2550 with schwab etfs.

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welcome back, everybody. you probably already know it by now but europe retained the ryder cup, they staged a big comeback after the u.s. began sunday with a huge lead as we headed into the final day of 12 singles matches. europe at this point has won the ryder cup five times in the last six matchups. and the new york giants taking on the division rival the philadelphia eagles sunday night football after the giants give up a late field goal giants kicker lawrence tynes comes up short on his 54-yard field goal attempt. other nail-biters, the saints falling to 0-4 losing to the packers. the washington redskins beat the tampa bay bucs in the final seconds with a field goal, 24-22 and the cardinals undefeated

beat the dolphins in overtime 24-21. if you've got comments, questions about anything you see here on "squawk," shoot us an e-mail squawk@cnbc.com is the address and following you on twitter @squawkcnbc is our handle. julia boorstin has her facebook preview. >> i sat down with sheryl sandberg, talked about the ipo and how she makes to build from the 1 billion user face. coming up after the break. and a big first step. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪

welcome back to "squawk box" everyone. in our headlines on this monday morning, greece's finance minuter it is set to submit its 2013 draft budget to parliament today, this comes as the government resumes negotiations with that so-called troika ka, the imf, ecb and the european commission. the troika has to sign off on a proposed two-year austerity package in order for greece to

receive more bailout loans. a crucial vote for boeing's engineers and technicians. 23,000 workers are expected to vote down an offer which they say erodes pay and analy. "transylvania" had the biggest opening ever. and julia boorstin had the opportunity to speak with facebook's sheryl sandberg. >> to make wall street happy all of the eyeballs and relationships with brands have to translite into more, that he's just what sandberg is working on. last thursday the company announced facebook gifts, that's the company's first move into e-commer e-commerce. facebook is concentrating on search and something brand new, selling brands and services like analytics and customer service.

>> as we increase our investment in monetization, we're thinking about premium services for businesses, we've heard from businesses all over the world that they want more from us, there are things they'd pay for they want us to provide so it's an area we're starting to explore. we don't have a product announcement but it is something we're working on. >> how big is the potential? >> we think the potential on facebook for almost anything is big because of our sheer size and scale and because of what users are doing and how engaged they are on the site. >> you have a lot of people's credit card buttons. will we see more e-commerce? >> we're working on lots of things and you saw last week the beginnings of commerce on facebook with our gift launch. >> there's been a lot of talk about that "want" button. will we see one? >> there is the ability to build all different open graph implementations and there are people working on that. >> mark zuckerberg talked about the potential in search. what is your plan for search? >> as mark said i think people

are surprised how much search is done on facebook, you know, every day there's enormous percentage of search. there's also a promise in the market that search could become more social that we don't think this has been met. when you're looking for information the question is who do you want it from, the wisdom of crowds or the wisdom of friends? our answer to the information that's most relevant for users is really about friends, that if i'm looking for a restaurant to go to in new york this week, i'd rather get a recommendation from a friend. that's really what we're working on. >> could a facebook social search compete with goingle? >> not going to comment on future product launches. we are working at making our products as usable and accessible for everyone in the world. >> facebook is increasingly moving into google's territory and not just with search. facebook is testing an ad network to deliver its ads to other websites just like google does. coming up later on "squawk on the street" more from my exclusive interview with sandberg including her first

time speaking publicly about the company's disastrous ipo and dismal stock performance. >> give us a tease. >> she was very cautious, obviously was careful what she was saying. she said she was surprised which is something that zuckerberg did not say when he spoke publicly about it, said she was surprised and disappointed. >> surprised by the collapse in the shares? >> by how it all went and disappointed. she repeatedly said she's disappointed. i pushed her on a couple issues, asking her what she thinks caused that disastrous ipo, how much she blamed the secondary market et cetera and kept on saying no comment because they have pending litigation so there are a number of things she couldn't discuss. >> let's brain craig barrett into the conversation. one question for you, are they speeding up, does it feel like the failure of the ipo is changing their business? meaning are they doing things they would otherwise not do as a result of sort of investor pressure that is out there? >> i think they are quickly looking for ways to make money

and before the ipo, mark zuckerberg talked about all he cared about was the product, the user experience and the product. they've done a total about-face since then and they are looking at every different possible way they can make money, e-commerce, search, premium services to business and i think that's happening in a much quicker pace because they're under so much pressure from wall street. >> craig, is that the right thing to do? isn't the argument you're supposed to stay on the path you're on? >> it's beautiful if you don't have to worry about shareholders or customers obviously, but if you're a public company you're at the whims of the marketplace and you have a way to monetize your product aufrt and meet expectation or the investor's expectations or you get a share price that dives. i think they're doing exactly the right thing, look for every way to monetize their billion users. they have abimmense potential with a billion users. the issue is finding the right equation to turn that into

money. >> to the extent there's a honeymoon, i think the honeymoon ended a long time ago. >> no honeymoon with facebook. >> to the extent mark goes on the tech crunch a couple weeks ago, this interview and the argument we're going to make money, about to make money so the question is next quarter, if they aren't making that money, how much time do investors have in terms of patience in. >> we have the lockup periods coming up and that will continue to hang over the stock for a while and the next big one is in november and we have the earnings release coming up october 23rd, so i think there's a lot of attention on each of those milestones, but i think that it is going to take another quarter before we see a real significant impact from a lot of these things they're testing right now. >> is there a price at which you'd invest in facebook? >> a price with which i'd invest in facebook. oh, yeah, absolutely. come on, they've got a p&l, they're a billion-dollar revenue company per quarter now. they have a billion users.

>> so what's the price? >> i'll have to talk to my financial adviser about that. >> when you think about what's going on in the valley in terms of what may or may not be a bubble and i know people come to you all the time trying to get you to invest in all sorts of businesses. has the facebook experience changed your thinking? >> i don't think so. facebook was a one-off situation. you had this tremendous user base, tremendous hype, tremendous potential and every bet on the potential and a little disappointed with reality relative to potential. you talk about how much time do you have, three months is an eternity in this deal so all the upcoming announcements they have their next quarter earnings, the end of the lockup period, pressure on selling stocks. it's going to be real pressure on the company. >> you talk about how facebook is associated with that. apple is the other. apple is a partner with intel now, they weren't for many years. you look at tim cook, his performance, what people are now calling mapgate, this problem

with the maps on their new iphone. are you bullish on tim cook? >> i think apple has done a fantastic job. steve jobs was a master of the universe in driving that company so you have to be pretty positive on apple and the products they've come out with. once you set the expectations you need to meet that expectation every three months. that's tough. >> you know this because you were the chairman of the company, how central is steve jobs or one individual to the company's success? >> steve was apple, period. he had great lieutenants working for him, mr. cook, others, but it was steve jobs. >> where does that leave the company now? >> well, if the next level can step up, tim can step up and continue the product rollouts, then more power to them. >> you always hear steve jobs was part of a road map, a five-year road map so the next couple years whatever we see is supposed to have come from his brain. do you believe that? >> you know, steve was really

unique. he could take a product which was already in the marketplace, wrap a good user interface on it and market it when everybody else thought it was dead. when the ipod came out there were a million mp3 players out there. ipod, itunes came out it took off like mad. it was timing, pack acing, the user interface. steve did all of that exquisitely. >> almost sounds like you're coming down on the samsung lawsuits back and forth. everybody is suing everybody for i thought of it first, i came up with it the right way. >> that's the real problem in the high tech world is when you lose out in the marketplace you sue somebody. i wish we could get rid of all that crap. >> craig, stay where you are. julia, thank you for the report, very interesting stuff this morning. >> it is. coming up more from craig barrett on the state of education and the future of america and later the first trading day of the fourth quarter ready to kick off on wall street. what's ahead this quarter and beyond with jeremy siegel.

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into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. welcome back. how is the united states education system doing and what needs to be done to give the nation its competitive edge back? we're joined with more from our guest host, craig barrett,

former chairman and ceo of intel and leading advocate on improving education around the united states and around the world. you talked about this an awful lot last week. we have five minutes, how do you solve the world's education problem. not easy to come up with. >> not easy but results are increasingly dismal. the s.a.t. scores just came out, lowest level in years, the number of kids getting post secondary college degrees in the u.s. is flat to down. every other oecd country is going up. we're getting dumbed down as opposed to getting smarter. >> what is the problem, the number of hours spent in schools, the money spent in schools? >> i wish it was a silver bullet, you could just say this is the problem. if there were one solution i think it would be more competition to the state monopolies that we have for education. i love the concept of when a kid gets to be 5 years old you buy him a backpack and each year you fill the backpack up with the

money the state would spend on their education for that year and let them go wherever the kid, the parents want the child to go. so you get more competition to the public system, that gives you higher expectations, better results, charter schools, vouchers, that sort of thing. >> charter schools and vouchers used to be seen as a republican issue. that has changed on awful lot. democrats and republicans, everyone is on board with this. what's stopping it in. >> you just saw a good example in chicago with the teacher strike, part of the reforming public education is to grade teachers, grade administrators, grade schools. nobody likes to be graded. they haven't been graded for years, so there's a resistance to that. it's the entrenched bureaucracy, theed the administrators, unions don't want to see change but 21st century is the knowledge century, it's education, unless we get better at education, i don't see much hope for us being

an economic power going forward. every other country in the world, education is number one. and here we talk about it, we're talking about it last week here in new york, nbc education nation, but all we do is talk about it. >> you need competition in education, don't you think? >> that's the key. competition is what will improve the system. >> can you imagine the post office running -- that's basically what we're seeing. >> you see that in essence although the post office is a national issue. >> actually they might do better. >> education is still a state issue. >> the minute you say anything -- i watched the president responding to it was a pretty good interview, i was impressed, with savannah, a good interview. every time she mentioned unions he said "i'm not going to bash the teachers" so he conflates it immediately. nobody will say that the teachers -- they're good people and trying hard but we're talking about the unions, we're not talking about teachers. we're talking about unions.

>> you can take one of two approaches in this, just go after the unions and try to change that or you can say i want competition. i want every state in the u.s. to have a charter school law. we've only got about -- >> charter school law that says what in. >> that charter schools are allowed. we have ten states where you can't have a charter school, you can only have public schools, the standard. >> but the money we throw with at education, with what we spend if you did it the right way. >> we spend way more than anybody else. one of my sideline activities is running a charter school system out of arizona, we just opened our first school in washington, d.c., school name is basis. we've got two other top high schools in the u.s. in a ten-year-old charter school system. it's possible to do it. we don't hire teachers, we hire content experts for the classroom, we put some degree of tension in the classroom. we have international expectations. kids, we were all kids once,

kids jump as high as you ask them to jump, and the basic problem in our education system is we set the bar so deangelo they don't have to work to get over it. >> put tension in the classroom? >> you pay teachers for performance, and you tell kids you don't pass the test, you don't move forward to the next grade. make it tension on both sides and put tension on the administrator and the school to make the school work. that's the sort of tension you see in the private sector, that's not the tension you see in the post office. >> public sector. just an example. >> it's one example and that's why i think competition is the way to directly affront and change the education system, not let's do what we've been talking about for 50 plus years, change the existing system. let's show the existing system what can be done with charter schools and alternative competitive education. >> how are the charter schools you're working with, the ones in arizona, how long have they been up and running? >> we started about 12 years ago and i said we've only, two of

our schools are old enough to have several graduating classes, and they've ranked in the top five in the u.s. that's not bad, actually, for our only two schools that have graduating classes. >> how big are the schools and how do people get in? >> you get into a charter school by applying. you can't screen kids. it's the first come, first serve. our schools are typically about 700 kids so middle school/high school combination so kind of 100 kids per class, but there are other great schools besides ours in arizona, a group called great hearts, there was, featured in education nation was this carpe diem, blended computer cubicle type classroom education where most of the education is online, all of these are alternatives though, giving the child alternatives. >> a lottery where parents are hoping against hope they can get into another school. >> that's where you want to

remove the restrictions on competition. new york has a limit on the number of schools, that's why you have a lottery here so you want to make charter schools easy to start, funded the same way you fund public education and just give parents and kids a choice. that competition is what makes the system better, not the status quo and as much as it's kind of fun to say it's the teacher union problem and all that -- >> call it competition. we're having a huge argument in this election about government involvement and about private sector competition and what makes for more positive outcomes. there's intentions, craig, you know that, good intentions and then there's outcomes. >> absolutely. >> it's easy to sell the, that i'm going to make outcomes fair and fail miserably and get reelected instead of making the student fair and letting the private sector do the work. >> k through 12, i'll use a real technical term, we suck, on an international basis, kids in the

bottom quartile in math and science. if you look at higher ed the university system we have the best universities in the world. what's the difference? universities are competitive, compete for professors, research contracts, students. k through 12 a monopoly. you have a public monopoly on one side and capitalism, competition on the other side. we excel where there's competition, we suck where there's none. >> we're not going to talk about health care now but that's going to become much less competitive and much less private sector involvement as well and that's 20% of the economy. >> well at least the public has kind of expressed its public opinion on it. >> 53-43. it's not going to be repealed if president obama gets reelected. >> unlikely. >> it's 53-43. >> 53-43 and you haven't had

anything -- >> disapprove-approve or obama. >> you haven't had let's rip money out of the medicare part of it and the promises about lower health care premiums have certainly not survived. i mean we've seen, what, 8% or 9% increase in health care premiums the last two years. >> craig barrett of intel is going to be our guest host for the rest of the program. we have a lot more to talk with him so stick around. when we come back an interview you cannot afford to miss, we have chicago fed president charlie evans joining us at 8:30 eastern time and a programming note by the way, cnbc's going to have live cover annual of the first presidential debate on wednesday night starting at 8:00 p.m. eastern time. up next on "squawk box" don't make a trade until you know which stocks are making headlines. joe tells you the pretrade news you need to know in "stocks to watch" right after the break.

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moscowitz a lot, it was the ceramic we put in a lot of our troops' armor. it's been higher at one point but it is acquired now by 3m for $35 a share in cash. it's a small deal, the market cap of the company is $500 million or $600 million. this is 800 if you take debt into consideration but it is being acquired by 3m. davita, buffett slightly increases the stake to 9.3 million shares from a prior 6.0 million, most recent purchases took place last week represent a smaller increase. hewlett-packard was mentioned kus cautiously at ubs. it expects it will warn of near term pressures and more structural changes may be required for hpq. why don't you run that place, hewlett-packard. >> you have a pretty good ceo in there now. >> is that a fixable business by

her? >> it's a great company, got a great history and great worldwide presence and -- >> huge intel customer. >> huge intel customer. and i think meg is a pretty good ceo. >> we'll see. would she have been a good governor or senator? >> she was running for governor and carly fiorina for senator. they might have brought california back to reality but it's still out there someplace. >> texas instruments downgraded to neutral from positive at susquehanna research, citigroup downgraded to neutral from buy, interactive corp. upgraded to buy from hold and allstart downgraded to market perform from outperform, target cap remains $40 a share. coming up at the top of the hour we'll kick off the fourth quarter with jeremy siegel and tell you where you should be putting your money to work and one of the fed's proponents of

quantitative easing, charles evans joins us, and some of the other prospects for our economy. "squawk" is back right after this.

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he was an advocate for open-ended qe long before fed chairman ben bernanke announced qe infinity. >> now chicago fed president charles evans is ready to take on critics of the plan. we're kicking off the fourth quarter with the biggest bull of all the squawkmarket masters. the odds of hitting dow's 17,000 by the end of next year are looking better and better says jeremy siegel. the third hour of "squawk box" starts right now. ♪ good morning again. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin and our guest host has been craig barrett, the former chairman and ceo of intel, obviously we have a lot more to discuss with him but we also

have many other big guests who are joining us through the hour, don't forget that this is the beginning of the fourth quarter, you can start it off with our portfolio strategy session, speaking with jeremy siegel about the market events likely to drive the fourth quarter including the november election. coming up at 8:30 a.m. eastern, cnbc's exclusive interview with chicago fed president charlie evans, long time advocate of further fed easing. we've been calling it qe infinity around here, he's ready to take on the critics of his plan. first andrew has your headlines of the morning. >> let's talk about the corporate headlines, 3m is buying ceradyne for $35 a share, a 43% premium over friday's close. and a crucial vote in boeing contract talks, showing whether workers are willing to accept a less gen cuss contract or move closer to a strike. local officials and analysts

consider a strike unlikely. and nokia is set to announce a new deal giving oracle access to the map services. the agreement will be announced at the oracle world conference. get a quick check on the markets, u.s. equity futures at this hour pretty much green arrows across the board as we hop across the stream. dow jones looks like it would be up 55 points, s&p 5 and nasdaq higher as well. eurozone manufacturing recording its worst quarterly performance since the depths of the great recession, factories hit by falling demand despite cutting prices. the survey suggesting the downturn spread to core members germany and france included from the smaller periphery countries and markets in shanghai, hong kong and south korea are closed for the holidays. the shanghai markets will remain closed for the rest of the week. some of the most powerful jobs in government may change hands after the november

location. eamon javers joins us to discuss the big piece in "the journal" today, erskine bowles. >> and lew. >> and hubbard and -- >> wait, wait, joe, don't use up all of my stuff, i have graphics all made up and ready to go. >> you're just doing that piece? do your own thing! >> we prepared this hit on friday afternoon, we got the graphics all ready. i was pleased to see the "wall street journal" this morning. >> your office is bug maybe. >> mentioning some of the names we mentioned. the "wall street journal" interesting because it suggests the obama administration might want to fast forward the selection of a new treasury secretary to take over for tim geithner. geithner is a lame duck in washington, they'll be looking for as replacement for him if obama gets reelected. let's look at the federal

reserve, that's supposed to be a cabinet table, looks kind of like a coffee table. if you look on the left, who obama would pick at the federal reserve, only putting one face there, ben bernanke will stay on if barack obama is reelected. on the right-hand side we see potential romney cabinet selections, glenn hubbard, he's been an economic adviser to both romney's presidential campaigns, last time and again this time, and john taylor at stanford university is also somebody who is mentioned frequently. look at state department as well that's obviously one that is a moving part right now because this interesting tension in washington on the obama side if he's reelected between john kerry who might have done himself some good with his speech at the democratic national convention, and susan rice is somebody who is often mentioned. now, this recent flap over libya and what the united states said or did not say about the situation there might have damaged her prospects a little bit. we'll have to watch that one, on

the romney side robert zoellick, former world bank president and richard haass, president of the council of foreign relations mention there had and treasury secretary we talked about some of the names for the obama cabinet starting with the obama side, jack lew, former white house chief of staff, he's most easily confirmed here. erskine bowles is somebody a lot of liberals are worried about in washington, they think maybe if obama picks bowles for secretary of the treasury that signals he's willing to do a deal that he was not willing to do in his first term. lael brainard, undersecretary of treasury for international affairs, recently dispatched to china. sheryl sandberg is an interesting one. i want to come back to her. let's do the romney cabinet picks and we'll come back to sheryl sandberg, julia had a great interview with her. glenn hubbard again under romney

picks, rob portman, former omb director and robert zoellick. lot of familiar faces as well on romney side. talk a little bit about sheryl sandberg, mentioned as a wild card in washington. julia boorstin interviewed her exclusively for cnbc and asked her about her interests in a position in washington. take a listen. >> there's been a lot of speculation that you're going to return to washington, d.c. are you interested? >> i really love my job at facebook. i really think we do something that's super important, right. 950 million people, largest community anywhere around the world. i love what i'm doing and i plan to keep doing it. >> and that, ladies and gentlemen, is the classic washington nondenial denial. she is not saying no to a position in washington which is a little bit causing ripples here in washington as people wake up to this news. i think sheryl sandberg is somebody people have their eyes

on as a potential obama appointee in the cabinet. the question is would she want to leave, she's been successful. what signals would it send in her business if she were to leave right now. lot of moving parts here. >> and give up a ton of money, as craig sass saying two tons. >> i was looking in some of her disclosure forms on friday exactly how much she'd leave on the table. how to calculate when things vest for her and whatnot, it would be tens of millions of dollars. >> eamon, did you see the name in the "wall street journal," i thought it was too early in the morning and i was losing my mind romney for treasury sec.ry they put john thein in that category and richard kovacevich from wells? >> i've not heard that time in the people i've been talking to, polling some of the washington wise men around time. going with a pure wall street player might be tricky even for a mitt romney presidency because

of some of the controversies over the great recession. >> kovacevich you could see is a real banker from the best coast, different from john thein. >> you want to get as far away from wall street as you could in picking somebody, unlike the old days you went with the number one guy at goldman sachs and called it a day. it will be different these days. i don't think lloyd blankfein is up for any jobs in either administration. >> i don't think paulsen gave up that much money. couldn't she do the same thing? >> presumably she could but she's got a lot of stock options going forward. >> shares to invest. >> she's got stock options investing into 2020. >> facebook would have to agree to all of these things, too. >> it's a great deal for anybody in part because your taxes you don't pay taxes. that's the great benefit.

for sheryl sandberg it's the vesting issue, so much of the shares are reflikted still. they couldn't make a deal with her that allows them to continue to vest. >> difficult pr deal to sell to the public i think. >> with all of the other issues they faced after the ipo to lose the person supposed to be the adult in the room guiding things? it would be tough. >> it would be tough for facebook. >> all right, eamon, thank you. >> thanks, guys. >> let's bring in our guest host, already in, intel former chairman and ceo craig barrett. what about you? >> ahh, i'm retired, raising the cattle and bison in montana and it's a great life. >> for meat? >> yes, yes, buffalo sells for about three times the price of beef. they grow a little slower, they don't really pay attention to fences, so it's tough to keep them on the ranch but they're beautiful animals.

>> so from here on out in terms of technology, do you think it matters what happens in washington for the future of technology? whenever we have anyone in, angel investors, most venture capitalists say they're not as affected by regulations as some of the more mature companies. >> what matters is if you create an environment for people to invest in the united states. the last several administrations i went to washington if intel is going to build this next major manufacturing facility the net present value of the facility in a u.s. compared to a lower corporate tax environment is $ billion. it's a tough sell to be patriotic and have that facility in the u.s. cut the corporate tax rate down to a competitive level. i think technology will continue to advance.

the problem is keeping the good ideas in the u.s. and create jobs. >> it can happen in spite of things or you can help or be sort of in the way? >> or you can facilitate for an economy which is growing. what we do with foreign graduate students, taxpayer money pays to educate them to get thai masters and ph.d.s and tech topics and our immigration policy says go home. it's a brilliant philosophy. >> you said the growth in intel will be abroad. whatever the tax policy is, i imagine you have to go abroad on manufacturing and engineering. you want to go to the customer. even if we get the rate right which we all want to, what is the ultimate impact? >> you obviously want to have a balance. you look at a company like intel the bulk of it's manufacturing still in the u.s., the bulk of its r&d is in the u.s. and the

bulk of it outside, exactly the industry you want in the u.s. >> does that shift over time? >> over time is shifts. if you have a disincentive to continue to make these multibillion-dollar investments in the u.s. they're going to be made in ireland or in china, someplace where there's a low tax, some incentive to make that investment so let's get the u.s. tax rate right. that's the key thing here, cut out the subsidies but get the u.s. corporate tax rate down to an internationally competitive level. >> you were saying 15% to 20% and simpson-bowles calls for 26% to 28%. >> i'd like lower, to be more competitive with the rest the world but get it out of the 35% range and down into the low 20s at least if you want to be competitive. >> don't hold your breath. >> we've been talking about it for a long time. the beauty now it's at least on the national debate. before it used to be a private conversation with the folks in

washington and they'd say we couldn't possibly touch that. now it's on the national scene. >> how much money does intel have outside the country? >> a lot. >> how much? >> i retired from intel three years ago. you have to ask -- >> what about the critics that say it makes people do it again when it's a holiday? >> do it permanently. >> fix it, fundamentally fix the system. in this country we play around the edges. >> we talk a good game, talk about caring. for the middle class. i care for the middle class. >> let's fundamentally fix the system to be competitive. let's fix our education system, let's fix our tax system. >> i care about kids. you need to care. you need to care about the result. stop doing things. when we come back we're talking about preparing your portfolio for the fourth quarter. up next a strategy session with jeremy siegel.

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welcome back. today marks the first day of the trading quarter. with the s&p up more than 14% year-to-date, can we expect to see profit-taking or will the gains continue? joining success jeremy siegel, professor of finance at the wharton school of the university of pennsylvania. professor siegel by the way is also the author of the book "stocks for the long run" and jeremy great to see you this morning. >> good morning. >> so here we go, the start of the fourth quarter and i know you've made bullish predictions of dow 15,000 and dow 17,000. where do you stand right now? >> i'm still with those predictions. those are for the end of 2013, remember, not for the end of this year. actually, if we're talking about this quarter, i think the most important event is not going to be on the election day, it's going to be after the election day, as the fiscal cliff gets

nearer and nearer, and i think the resolution of that one way or the other is going to be the market moving event. >> jeremy, we've had a lot of people who have said no matter what happens what happens with the election, it's going to be a better situation for the markets but what you could be talking about with tax policy likely is going to be higher cap gains taxes, higher dividend taxes f they go from 15% to let's say 25%, what does that mean for the market? >> well, i think a worse case scenario, capital gains even in obama's plan is 20% and we have the 3.8% medicare tax so that brings it to 23.8, now you know, obama surprised everyone by saying i don't want preference on the dividend tax but the reality is that most democrats actually do want the dividend tax to be lower and there's bills to mabke it half of the

regular tax, bills to make it 20%, again, also subject to the 3.8, which again only kicks in that high income levels, it's not across the board. so i say worse case scenario is really 23.8% for both the dividends of capital gains, certainly -- >> even simpson-bowles would tax it as ordinary income which is what we had in 1986 and that's a higher level. >> right, that brief time under reagan where we did get down to virtually a simpson-bowles solution back then, didn't keep it for very long. don't forget there's going to -- simpson-bowles is still a long way off. i'm not saying that the congress doesn't want to get together. >> if you're talking more than simpson-bowles you can look at the rivlin-domenici plan, but you have to look at things both sides of the aisle hate and mash them together to get the programs passed. >> absolutely.

i think what the market is looking for, for this quarter, is after the election, what i'd like to see is a six to nine-month extension so that the next congress can work on it. they're not going to do simpson-bowles between november 6 and december 31st. there's no way anything like that can be accomplished. all they can do is say let's give this some time, let's again -- >> agreed. >> -- postpone it. i think that could mean 500 to even 1,000 points on the dow just removing that uncertainty. >> you are looking at the next six to nine months the uncertainty is gone, doesn't matter what's out there. >> uncertainty will be resolved not just on the tax rates. we have to make some solution on the fiscal side, with the deficit, which is what simpson-bowles is really about, not just tax rates, but also some progress on those long run fiscal deficits. both any progress there is also going to be positive, i think, for the markets. so worst case scenario the

market could live with 23.8%, the high income levels for the capital gains, still go be much, much lower for middle and lower income, they can live with that, if you resolve that uncertainty i think you've got enough market. >> let me throw another wrench at you, this time you're looking at the potential slowdown around the globe. this is the lead story in the "wall street journal," we got bad numbers again out of europe today, just looking at the industrial numbers that are going to come here a little later today but we've heard it again and again from ceos, we've seen fedex and caterpillar warning about global growth. if the globe slows down then what? >> well we do have you know the u.s. is looking fairly good and as they say a bad lot now, i've been saying for six months that i think housing is going to be the driver of the u.s. economy in 2013. we could get a point, point and a half up on gdp just from a

revival in the housing. europe is a mess. i've thought the euro has to go down, went above 130, is a little lower now. they have to bring that down some. i've been stung by that. that's the only way i think they'll save the periphery. the periphery is going to be a mess for many years to come. there are fiscal reforms that will be slow and painful. as far as china is concerned it's stabilizing there, it's not easy to come off a mammoth real estate boom. they're doing a better job than we did. >> craig barrett is our guest host today, former intel chairman and ceo and talked about how technology is going to go the same way as the international markets, 70% to 80% of the sales of big tech companies are. do you worry about it coming back to our shores anything that's happening overseas and affecting our own home

companies, too? >> there's no question. what is it, 40%, 45% of the profits of the s&p come from global non-u.s. sales. we can't standalone from the global market, a big slowdown is going to impact us. i think the important thing to consider is that you know we don't need a lot of growth of earnings to actually have the stock market do well. you just remove some of that uncertainty, get the valuation. it's going to be multiple expansion, i think is going to be the most potent source of the bull market over the next three to six months, knots necessarily those earnings growth. >> okay, professor, thank you very much for your time today. it's great talking to you. >> happy to be here. >> thank you. coming up, do you or someone you know share too much information on facebook? up next, facebook coo sheryl sandberg on privacy concerns for the social networking giant and 8:30 eastern our exclusive interview with chicago fed

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welcome back to "squawk box," everybody. do you share too much on facebook? well, the company wants to make sure you have the option to share as little or as much as you want. julia boorstin caught up with facebook's coo, sheryl sandberg, at the company's headquarters. >> does it scare you, you helped create a generation of oversharers? >> i think people have the ability to share what they want. what is one person's ridiculous oversharing is another person's regular day and we build technology that lets users share what they want to share and that's tremendously, tremendously exciting. i don't pretend to judge what any individual does. >> of course the question is, do we really know how to use those things and keep them? i know i've had my own issues on facebook, things get out there and your friends and your friends and your friends can share whatever they want along the lines but we'll see. i don't know. you can hear more of that interview with sheryl sandberg throughout the day. when we come back we are just a few minutes away from our u.s. in make are of the morning,

steve liesman joins us from chicago and you have a big guest for us. >> yes, we have chicago fed president charlie evans coming up and i don't know if you love what the fed did with questie3 hate it. charlie evans was one of the intellectual leaders behind what the fed did this past month. we'll ask him all that good stuff when we come back. those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it. like in a special ops mission? you'd spot movement, gather intelligence

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welcome back to "squawk box" this morning. in our headlines the first economic reports of the fourth quarter are ahead this morning, at 10:00 a.m. eastern we're going to see the institute for supply management september manufacturing index, that's expected to remain slightly below the 50 level that separates expansion from contraction. we're also going to get august construction spending figures. and 3m is buying industrial productsmaker ceradyne for $35 a share, the two sides expect the deal to be completed before the end of the year. airlines are having a better year than first thought, the international air transportation association has raised its industry profit forecast to $4.1 billion, up from an early $3 billion forecast but still well

below last year's $8.4 billion. let's get to our newsmaker of the morning. steve liesman joins us from chicago with a very exclusive interview. steve? >> yes, thanks very much. i'm here in chicago with the chicago federal reserve president charlie evans. >> nice to be here. >> a year ago you laid out this idea of pegging policy to unemployment, and to inflation, given what the federal reserve just did, do you feel vindicated and the follow-up to that is do you feel satisfied, is it enough? >> well, last year i was here and i was talking a lot about our dual mandate responsibilities and i mentioned that with the unemployment rate at that time at 9% that was unacceptably high and we need to focus more on our dual mandate responsibilities. i feel good that our most recent statement and policy is focusing on strongly on the labor market, we're looking for substantial

improvement in labor market conditions, the criteria for how long we're going to continue with very accommodative policies and that's a step in the right direction. >> a step in the right direction but is it enough? you want the fed to do this for a particular reason, which was you felt it would make policy more effective. they haven't done exactly what you advocated which is to peg numbers to policies, so is it enough? >> right to my own prescription has been that we become very explicit about our forward guidance and indicate the funds rate will remain low until at least the unemployment rate goes below 7%. or if something goes wrong and inflation goes up to a higher tolerant range 3% maybe we should back off. i think that would be a clear guidance on top of our mid 2015 language. what we're currently embarking upon with increasing our long duration assets on our balance sheet to the tune of $85 billion

per month we're looking for substantial improvement in labor market conditions. for me, that seems like we ought to be seeing $200,000 increase in payroll employment per month, maybe a little higher than that for about six months really. we ought to see growth that is above trend which supports that continuing substantial improvement in labor market conditions. if we get those things to move at the same time, we'll see the unemployment rate go down. that would be movements towards having enough accommodation. >> you have changed your growth forecast because of the fed's recent policy? >> when we submit growth forecasts, we're supposed to do it under the assumption policy and i had been saying the last two years that policy ought to be far more accommodative than our actual actions should be. my most recent forecast has been for quite substantial improvements in the economy, premised on the idea that policy

would be accommodative about like what we're seeing, i think we could do a little bit better by being explicit about our forward guidance, but so my forecast has unemployment coming down to the 7% range by the end of 2014 which is another reason why i think we should be accommodative. >> when do we get that above trend growth? >> during that period to get the unemployment rate continued to move down we would be seen above trend growth so we would be seeing growth next year, 2.5, 2.75 but after that above 3% substantially. >> as you might have imagine and read there's a lot of skepticism about the policy and how it's going to work. can you explain how buying mortgages specifically will lead to lower unemployment? >> well, to the extent that we make it more attractive and easier for people to refinance their mortgages it leaves that with more aftertax income to spend so if they need to save

more, they can save more quickly. if they would like to spend and buy a durable good they put off buying for the last three years, buy a new car would increase demand. when you increase demand firms find their existing workforce isn't enough to meet demand. businesses are waiting for that demand to increase and they would begin to expand employment, more people come into the labor market they have higher income demand increases. if we could get things going a little bit more we have a lot of accommodation in place that can be more effective once mortgages are refinanced. >> interest rates were already so low. it seems like by the way that when it comes to home purchases, refinance something a different story but for home purchases there seems little sensitivity to the change of rates to actual home purchases. why would even lower rates prompt people who essentially an american public trying to delever, why would they want to take more debt at lower rates?

>> financial conditions are not as accommodative as you're suggesting, they're pretty accommodating and every time we start talking about we might be concerned about inflation, we might have to increase the funds rate sooner than mid 2015, that imparts more restrict i haveness than is our intention with our policy. i think to the extent you get more people refinancing and having the opportunity to the extent that small business people find the environment more attractive to borrow. banks are looking for good quality creditor -- credits in order to make these loans to the extent we start to improve things, they'll be able to do that and things will really start to burst forward i believe. >> in jeff lacquer's dissent he said further quantitative ease something unlikely to improve growth and likely to create inflation. >> i don't think we've seen inflationary concerns. our inflation outlook is for

less than 2%. 2% is our long run observe jiktive fjikt i objective for inflation. i don't think we've done a good enough job describing our attitudes. i don't see the inflationary pressures. the kind of concerns i hear from a lot of people are premised on the idea the natural rate of unemployment is substantially higher than what we really think about the current rate. if you believe that, you would believe inflation was going to take off and if you don't think inflation is going to take off now, instead well, i think this is going to depend on how things play out but eventually people will find inflation higher it's that inbetween period, i've never heard a good description of that describes how we get from our current period to higher inflation. i think the way we get to a point like that is you get the economy to grow, banks start

lending and more money in circulation in a productive fashion. price pressures and interest rates would go up, that would be a healthy thing in terms of higher interest rates. >> let's leave it there. you'll take some questions from joe, becky and andrew, when we come back. are we going right to break or back to the anchors? >> we'll take it here for a second. we have our questions ready so as soon as we come back from the break we'll continue that conversation with chicago fed president charles evans. don't miss "squawk box" tomorrow, our guest host will be another windy city icon, we have two hours with sam zell, get the chance to talk about real estate, the economy, the presidential election, much, much more. "squawk" will be right back. [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables.

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welcome back to "squawk box." let's get back to our exclusive interview with chicago fed president charles evans. thank you for -- hey, steve, how are you doing? you're not charlie evans. >> am i on the screen right now? i don't see it. >> yes, yes, you are. oh! there is he. >> well, get me off, get charlie on. there we go. >> i ask a couple of people this already i think, president owe vans, that was when we saw the size and the magnitude of the latest moves, qe moves, a lot of people thought that things must be a lot worse than what we were led to believe and we thought we'd see some numbers that would

make that apparent. we haven't seen numbers that are making that apparent, and i guess if you consider that it's a dual mandate, as long as we're above 8%, anything is justified. is that the thinking of the fed at this point, and i guess if inflation's low you can satisfy that mandate as well. you could even say that inflation's below our target so you're satisfying both mandates, but was that the thinking, there was really nothing worse than the rest of us thought in the economy when you decided to do this? >> well, that's a good question. i think that it's evident the data softened during the summer and this ends up being the third summer that we've seen the data soften from a first year, first part of the year where we thought things were going to get better. we haven't been able to do that through either of these time periods. the committee decided that we wanted to be careful and assess the data as it comes in over the summer, but look, i think the chairman was very clear at

jackson hole, when he said that the state of the labor market is a grave concern, and we need to see better improvement than we have. when the benchmark unemployment rate is on the order of 5% to 6%, that's where we ought to be and we're at 8%. that tells me more accommodation would be appropriate especially if it's effective, by all the analyses i've seen it will be effective and the inflation risks are not large. we're underrunning our 2% long run objective so there's scope for doing more. i would have been doing more for a longer period of time but the committee made the determination that we're a lot closer to something like unacceptable growth. >> fixing the fundamental issues facing our country long-term would be a much better way probably to deal with the jobless rate but i guess you can only, that's not your domain, that's not chairman bernanke's domain, fiscal policy and what happens with, you know, making long-term changes to the way

things are. so you can only deal with one thing so you decided this is all we can do so we got to do it. i can't connect monetary policy and easing with jobless rate. maybe the stock market goes up, assets go up, so that eventually people hire? i can't connect the dots between that. >> i would say putting more funds in the hands of homeowners, consumers, allowing businesses to borrow at attractive terms, in an environment where uncertainty has been lowered, i will agree with your premise that there are a number of head winds, fiscal policy that is putting restraint on what we're facing and it is normal for monetary policy to always look at the state of fiscal policy and respond appropriately. imagine an alternative situation where fiscal policy was so aggressive and leading to growth above trend that it was generating inflation pressure, we'd have to be concerned about those inflation pressures.

that's standard monetary policy. just in the current environment it's in the other direction. >> president owe vans one of the questions has been the idea of how effective it is and how much of the money is getting to the people who need it most. when you look at refinancing your mortgage you can't do it if your homes are underwater, if you don't have 20% to 30% ek withity in your home, those people could be helped the most at the margins being able to refinance their home, you look at savers who are being penalized by the low rates they're getting in savings and then you wonder about the people who are at the bottom who would be the first ones to get hit when inflation does start to pick up as a result of the money out there. do you get frustrated you don't have a way of getting that money to people who need it the most? >> i talked about the homeowner situation before. on the savers issue it's certainly the case they would be better off if interest rates were higher. frankly the entire economy would be better off by higher interest rates. if what you mean is an

ex-policity tightening of policy, raising the funds rate prematurely that's not the right way. we'd have to backtrack, the economy wouldn't do very well and when the economy doesn't do well, interest rates are low. the way to get sustainable, higher interest rates for savers is to get the economy growing. get things moving up and real interest rates will go up. >> a lot of people tried to get their homes refinanced and can't because the prices have come down so much they don't have enough equity in their house. >> that would be a huge improvement if more progress were made along the lines of the the administrations harp two program, if more was done by fannie and freddie to allow under water homeowners to refinance. fannie and freddie are already facing the risk of anybody who is in default, for people who have been current on their mortgage all that time, a lower mortgage rate would give them relief so that they could get ahead more quickly, they could

pay down other debt, they could spend more, fannie and freddie is already on the hook for that risk. that would be an improvement. glenn hubbard at columbia university has a terrific proposal in play for something like that and that's similar to the president's, too. >> president evans i imagine you modeled this out, you think about the saving or spending that will come as a result of this program, what percentage of the money that gets released if you will that gets put back into the system versus the money that gets saved? >> well we're certainly in a situation i don't have exactly the numbers on that but it's certainly the case that people who find themselves with a lot of debt if they have more income, they may very well want to pay it down. they would be that much closer to being able to buy durable goods purchase and then other people will immediately say hey, i've been waiting to replace my car. it's been on the road for the last 12 years. >> this question goes to the efficacy of the program meaning

do you expect 50% of the new money released to go back into the system more, is it 75%, is it 80%? how much of it gets saved? >> i think what we want to do is change the confidence factor and get people moving forward, so it's less important what the exact percentage is tomorrow and next week. people have more confidence we're working to turn the economy around, we're going to get to a point where banks find it to their advantage to take a little bit more risk on customers who walk through the door what have a proposal for a better business or to buy something and they extend those loans, once we get bank lending to move up for the right reasons then the economy will be that much stronger and that's what we're aiming for. >> charlie, let's talk about what happens after say the first of the year. t.w.i.s.t. will end as it's been extended and you said 40 billion of mortgages. what do you expect to happen in january? >> the next decision point is

this, our current program is adding $85 billion of longer duration assets to our balance sheet. when you put the mbs purchases together with the operation twist so the question would be, do you want to continue with 85 billion, is that enough in order to achieve substantial improvement in labor markets. i frankly think it's going to take almost a year in order to see the type of improvement in labor markets that i'm expecting, just getting through the first half of next year with the headwinds that we're facing, i think that it's probably later in 2013 that we would get there, so in my opinion, we'd continue with those asset purchases until we see payroll employment more like 250,000. >> you're saying continue at 85 billion into all of 2013 would be your recommendation? >> this is my recommendation, yes, because i think that if you go from a period where you've got $85 billion being added to the long duration assets to

nearly 40 billion that's a step down in what you're delivering. is that consistent with substantial improvement in labor markets? >> and would it be all mortgages or mortgages and treasuries you expect in. >> as we continue through these purchases we'll look at the state of financial markets, their ability to absorb it. we've looked at it, it shouldn't he aba problem. is the economy improving enough you want to perhaps tailor, have it reduced a little bit or expanded if we're not getting quick enough improvement. those are some of the questions that will be asked and we'll be addressing. >> looks like september is now a tradition, i'll be back if not sooner than that next september to see how we're doing. thanks for joining us. >> thanks, steve. >> guy, back to you. >> thank you, steve and thank you, president evans. appreciate it very, very much. coming up, stocks on the move ahead of the first day of trading for the fourth quarter. i know where you're going with that. we'll head down to the new york stock exchange coming up next. tomorrow we have activist investor bill ackman our guest

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let's get down to the new

york stock exchange. jim cramer joins us now. what's on your radar, my friend? >> charlie evans just said he would like to see operation twist continue for all of 2013. it's big news. they're real worried. great interview. >> is he really worried or do you think the entire board is really worried? >> well, after that great piece last week about seeing how bernanke -- he really has gotten all the cats together, which is amazing to get those guys thinking in one direction. but this is the kind of thing that makes it so that if you're negative, you're fighting this. you're fighting -- what does it really do for mortgages? what does it really do for income? no, it's what it does for the stock market. >> but is that what we should be playing? isn't that frustrating that this is only about the stock market? this is all -- craig was saying, like monopoly money, that's what this feels like.

>> i always won at monopoly. and if i didn't, i turned the board over. >> jim, for a while, you've been saying things are pretty good out there, right? you said that to me, things are improving. they're doing better. >> housing is better. retail is better. auto is better. that's a big part of the economy. >> then, is the little bit that this might help at the margin -- is it worth that exit question that everybody's so worried about when they try to -- >> yes. >> it is worth it? >> i think if you can continue to have autos do well, big part of the economy -- >> you love main line and money in the stock market. i know you cramer, right? >> yes, i do. i like the eagles and i like main lining. >> you had to bring that up, too. jim, be careful down there. >> tenet health care came out with a press release. looks like they are doing a reverse stock split. >> that's a muhammad ali

situation. they can run but can't hide. >> they say they see $400 million in near-term acquisitions. >> really? >> i don't know. >> i don't know that stock is flat. that's been a flatline stock. i would prefer to focus on saradyne. >> i'm puzzled with you sometimes. you want it both ways. you've told me how much better it's really going in the economy. but you still want pedal to the metal from the fed. it's crazy. >> we need job growth. it's the one thing -- >> like that's the way to do it, though? i don't know. >> what else do they have? >> i don't know. we have to fix some of these long-term things, i guess. but you wonder where the market goes up. but you buy less with the dollars that you've got, right? >> quite true. but at the same time if you have a great yield on a stock, this is the kind of thing that says, this is a very good replacement for cds. they're not going to make any

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final thought from your guest host this morning, craig barrett, the former chair and ceo of intel. do you have a final thought? >> fix some of the problems the u.s. economy has. go to bowles/simpson or something that solves the long-term problems. david walker, controller general of the u.s., gave speeches for ten years, the impending disaster. he left office in 2008. it's gotten worse since then. and we sit here and throw $1 trillion a year at the problem.